Tag: beijing

Tax cuts in China could be at the center of Beijing’s fight against a slowing economy amid an ongoing trade spat with the U.S., experts said. “Fiscal policy will be the front line of defense against mounting macroeconomic headwinds in 2019,” Haibin Zhu, J.P. Morgan’s chief China economist, wrote in a recent note. The challenges in China’s economy are already starting to show. That comes amid signs of softening demand — with recent data pointing to weaker exports and a slowdown in manufacturing a

Tax cuts in China could be at the center of Beijing’s fight against a slowing economy amid an ongoing trade spat with the U.S., experts said.

“Fiscal policy will be the front line of defense against mounting macroeconomic headwinds in 2019,” Haibin Zhu, J.P. Morgan’s chief China economist, wrote in a recent note.

The challenges in China’s economy are already starting to show. On Monday, Beijing reported its slowest GDP growth in decades, with official data showing that the economy grew 6.6 percent in 2018 compared to a year ago — it’s slowest rate of expansion since 1990.

That comes amid signs of softening demand — with recent data pointing to weaker exports and a slowdown in manufacturing activity — as the trade war with the U.S. appears to be taking a toll. Analysts such as Zhu say that Beijing will need to turn to fiscal measures, which typically means boosting government spending and cutting taxes, in order to stimulate the economy.

That could pull 2018 gross domestic product (GDP) growth to 6.6 percent, the lowest since 1990 and down from a revised 6.8 percent in 2017. “What China can really do this year is to prevent deflation, prevent a recession and a hard landing in the economy,” Chen said. On a quarterly basis, growth likely eased to 1.5 percent inOct-Dec from 1.6 percent in the preceding period. China will release its fourth-quarter and 2018 GDP data onMonday (0200 GMT), along with December factory output, retailsale

China is expected to report on Monday that economic growth cooled to its slowest in 28 years in 2018 amid weakening domestic demand and bruising U.S. tariffs, adding pressure on Beijing to roll out more support measures to avert a sharper slowdown.

Growing signs of weakness in China — which has generated nearly a third of global growth in the past decade — are stoking worries about risks to the world economy and are weighing on profits for firms ranging from Apple to big carmakers.

Chinese policymakers have pledged more support for the economy this year to reduce the risk of massive job losses, but they have ruled out a “flood” of stimulus like that which Beijing has unleashed in the past, which quickly juiced growth rates but left a mountain of debt.

Analysts polled by Reuters expect the world’s second-largest economy to have grown 6.4 percent in the October-December quarter from a year earlier, slowing from the previous quarter’s 6.5 percent pace and matching levels last seen in early 2009 during the global financial crisis.

That could pull 2018 gross domestic product (GDP) growth to 6.6 percent, the lowest since 1990 and down from a revised 6.8 percent in 2017.

With stimulus measures expected to take some time to kick in, most analysts believe conditions in China are likely to get worse before they get better, and see a further slowdown to 6.3 percent this year. Some analysts believe real growth levels are already much weaker than official data suggest.

Even if China and the United States agree on a trade deal in current talks, which is a tall order, analysts said it would be no panacea for the sputtering Chinese economy unless Beijing can galvanize weak investment and consumer demand.

Chen Xingdong, chief China economist at BNP Paribas, said investors should not expect the latest round of stimulus to produce similar results as during the 2008-09 global crisis, when Beijing’s huge spending package quickly boosted growth.

“What China can really do this year is to prevent deflation, prevent a recession and a hard landing in the economy,” Chen said.

On a quarterly basis, growth likely eased to 1.5 percent inOct-Dec from 1.6 percent in the preceding period.

China will release its fourth-quarter and 2018 GDP data onMonday (0200 GMT), along with December factory output, retailsales and fixed-asset investment.

Since China’s quarterly GDP readings tend to be unusually steady, most investors prefer to focus on recent trends.

Surprising contractions in December trade data and factory activity gauges in recent weeks have suggested the economy cooled more quickly than expected at the end of 2018, leaving it on shakier footing at the start of the new year.

Sources have told Reuters that Beijing was planning tolower its growth target to 6-6.5 percent this year from around 6.5 percent in 2018.

U.S. officials expect China’s top trade negotiator may visit Washington this month, signaling that higher-level discussions are likely to follow this week’s talks with mid-level officials in Beijing as the world’s two largest economies try to hammer out a deal to end a tit-for-tat tariff war. People familiar with the talks in Beijing said on Thursday that hopes were mounting that Liu would continue talks with U.S. Trade Representative Robert Lighthizer and Mnuchin. Talks at that level are viewed

U.S. officials expect China’s top trade negotiator may visit Washington this month, signaling that higher-level discussions are likely to follow this week’s talks with mid-level officials in Beijing as the world’s two largest economies try to hammer out a deal to end a tit-for-tat tariff war.

“The current intent is that the Vice Premier Liu He will most likely come and visit us later in the month and I would expect the government shutdown would have no impact,” U.S. Treasury Secretary Steven Mnuchin told reporters on Thursday in Washington. “We will continue with those meetings just as we sent a delegation to China.”

The U.S. government is in the 20th day of a partial shutdown with President Donald Trump, a Republican, and congressional Democrats feuding over funding and Trump’s desire for a wall on the U.S.-Mexico border.

People familiar with the talks in Beijing said on Thursday that hopes were mounting that Liu would continue talks with U.S. Trade Representative Robert Lighthizer and Mnuchin.

Talks at that level are viewed as important for making the key decisions to ease a festering trade war, which has disrupted trade flows for hundreds of billions of dollars worth of goods and roiled global markets.

Trump has demanded better terms of trade with China, with the United States pressing Beijing to address issues that would require structural change such as intellectual property theft, forced technology transfers and other non-tariff barriers.

Trump on Thursday said the United States was having “tremendous success” in its trade negotiations with China.

A spokeswoman for Lighthizer’s office declined to comment.

More than halfway through a 90-day truce in the U.S.-China trade war agreed on Dec. 1 when Trump and Chinese President Xi Jinping met at the G20 summit in Argentina, there have been few details provided of any progress made.

Trump has vowed to increase tariffs on $200 billion worth of Chinese imports on March 2 if China fails to take steps to protect U.S. intellectual property, end policies that force American companies to turn over technology to a Chinese partner, allow more market access for U.S. businesses and reduce other non-tariff barriers to American products.

The timeline is seen as ambitious, but the resumption of face-to-face negotiations has bolstered hopes of a deal.

“We have the two sides back at the table. That’s encouraging,” said Myron Brilliant, the U.S. Chamber of Commerce’s head of international affairs, while speaking to reporters at an event on Thursday.

Asia stocks mostly gained Friday amid improved investor sentiment following overnight gains on Wall Street. The mainland Chinese markets, watched in relation to the ongoing trade war between Beijing and Washington, were higher on the day. The moves followed after officials from Washington and Beijing met for trade talks earlier this week — details about the progress were sparse. U.S. and China have halted an ongoing trade war to try and resolve sticking issues on a number of areas. “There are so

The mainland Chinese markets, watched in relation to the ongoing trade war between Beijing and Washington, were higher on the day. The Shanghai composite was up about 0.74 percent to close around 2,553.83 while the Shenzhen composite gained 0.758 percent to about 1,313.36. The Shenzhen component also rose 0.611 percent to close around 7,474.01.

Meanwhile, Hong Kong’s Hang Seng index gained about 0.5 percent, as of its final hour of trade.

The moves followed after officials from Washington and Beijing met for trade talks earlier this week — details about the progress were sparse. U.S. and China have halted an ongoing trade war to try and resolve sticking issues on a number of areas. Analysts who spoke to CNBC on Friday were divided whether a deal between the two economic powerhouses would be forthcoming.

“I think (U.S. President Donald) Trump wants to have a win and (Chinese leader) Xi Jinping desperately needs to have a win. So, I think they’re gonna come to some agreement … probably in the first quarter,” Andrew Collier, managing director at Orient Capital Research, told CNBC’s “Street Signs” on Friday.

Collier said, however, trade frictions between Washington and Beijing are unlikely to end as “China clearly … is a threat to the United States and plus it has done many things that many countries disagree with.”

Others did not agree.

“There are some that would argue that the Trump administration needs a deal, given that they’re walking into an election cycle in 2020 … I would respectfully disagree,” James Sullivan, head of equity research ex-Japan at J.P. Morgan, said. “What the Trump administration needs to do is incite his base. A deal, by definition, means compromise. Compromise doesn’t incite.”

There was ‘frustration’ in Kim Jong Un’s message: Expert 4:50 AM ET Wed, 2 Jan 2019 | 03:00But to do so, Pyongyang needs help from its rich neighbors. The nuclear-armed nation is seeking more than $7.7 million in investment, the Seoul-based online newspaper NK News reported last month, citing information from a website run by North Korea’s foreign trade ministry. Xi’s Belt and Road project offers the perfect answer to those needs. Pyongyang “would love to be part of Belt and Road,” Dane Chamorro

But to do so, Pyongyang needs help from its rich neighbors. The nuclear-armed nation is seeking more than $7.7 million in investment, the Seoul-based online newspaper NK News reported last month, citing information from a website run by North Korea’s foreign trade ministry.

Xi’s Belt and Road project offers the perfect answer to those needs. China has historically been Pyongyang’s largest trading partner.

Pyongyang “would love to be part of Belt and Road,” Dane Chamorro, a senior partner in the Asia Pacific division of Control Risks, a consulting firm specializing in politics told CNBC on Friday. Kim’s government is waiting for an invitation so his country can get assistance on the construction of railway links and ports and other facilities, Chamorro said.

Beijing also seems keen on Pyongyang’s inclusion, with the Chinese government inviting a North Korean delegation to attend a Belt and Road summit in 2017 — but it’s unlikely to take any action for now.

Including Pyongyang in the BRI is “probably more trouble than it’s worth” at the present moment, said Mintaro Oba, a former U.S. State Department official who specialized in the Koreas during the administration of former President Barack Obama.

For one, sanctions still remain in place. Beijing, however, has called for those penalties to be eased.

“If anything, cooling factory gate inflation will strengthen the case for the central bank to do more to ease financial pressure on industrial firms including by cutting benchmark lending rates.” “Rapidly falling inflation, especially factory-gate PPI inflation, is further evidence that China’s economy is slowing at a worrying pace,” Nomura economists wrote in a note on Thursday. The slower inflation will give Beijing “plenty of room to loosen (monetary) policy,” said Evans-Pritchard in a note o

“If anything, cooling factory gate inflation will strengthen the case for the central bank to do more to ease financial pressure on industrial firms including by cutting benchmark lending rates.”

China’s Consumer Price Index — a gauge of prices for goods and services — rose 1.9 percent on year in December, lower than economists’ expectations of a 2.1 percent growth, according to a Reuters’ poll. The CPI rose 2.2 percent in November.

The latest data brought China’s PPI for January to December 2018 a rise of 3.5 percent, while full-year CPI was up 2.1 percent — below Beijing’s target of 3 percent in consumer inflation for the entire year.

“Rapidly falling inflation, especially factory-gate PPI inflation, is further evidence that China’s economy is slowing at a worrying pace,” Nomura economists wrote in a note on Thursday.

The slump in producer inflation suggests corporate earnings would fall in the coming months, they added.

Analysts say the latest data could lead to further easing measures by the government as it seeks to stimulate the economy.

The slower inflation will give Beijing “plenty of room to loosen (monetary) policy,” said Evans-Pritchard in a note on Thursday. “If anything, cooling factory gate inflation will strengthen the case for the central bank to do more to ease financial pressure on industrial firms including by cutting benchmark lending rates.”

“Falling inflation leaves more room for Beijing to roll out more aggressive policies to bolster growth and could lead to lower interbank rates and bond yields,” the Nomura analysts added in their note.

Economic data from the world’s second-largest economy are being closely watched for signs of damage inflicted by the trade war between Washington and Beijing.

In a Thursday morning statement, China’s Commerce Ministry said the just-concluded round of trade talks with the U.S. were extensive and established a foundation for the resolution of each others’ concerns. Both parties, the Beijing ministry said, agreed to maintain close contact. The talks lasted for three days in Beijing — one day longer than had been previously announced, which analysts said indicated the discussions were making some progress. He added that the structural issues that made pro

In a Thursday morning statement, China’s Commerce Ministry said the just-concluded round of trade talks with the U.S. were extensive and established a foundation for the resolution of each others’ concerns.

Both parties, the Beijing ministry said, agreed to maintain close contact.

Here’s the full three-sentence statement, as translated from Chinese by CNBC:

From Jan. 7 to 9, China and the U.S. held discussions in Beijing at a vice-ministerial level over the issue of trade. Both sides enthusiastically implemented the important agreement of the heads of both countries, and held broad, deep and meticulous discussions on shared observations on trade issues and structural problems, laying the foundation for addressing areas of common concern. Both sides agreed to continue to keep in close contact.

The U.S. side had issued its own statement earlier in the day, noting a long list of outstanding issues, but also recognizing that China had pledged to purchase “a substantial amount of agricultural, energy, manufactured goods, and other products and services from the United States.”

The talks lasted for three days in Beijing — one day longer than had been previously announced, which analysts said indicated the discussions were making some progress.

Gao Feng, a spokesman for China’s Commerce Ministry, said Thursday afternoon that the length of the meeting indicated that both sides were serious and honest. He added that the structural issues that made progress during the talks included forced tech transfers and the protection of intellectual property rights.

Another signal that experts cheered: China’s top trade negotiator Liu He reportedly stopped by the negotiating room on Monday, which was unexpected given that the talks were just meant to be held at the vice-ministerial level.

During a Chinese foreign ministry briefing on Monday, spokesperson Lu Kang said that “China is sincere about properly resolving trade frictions on the basis of mutual respect, equality, mutual benefit and reciprocity,” according to an official translation. He would not confirm a media report saying Chinese Vice President Wang Qishan will meet with US President Trump during the World Economic Forum’s 2019 Annual Meeting in Davos, Switzerland.

In early December, U.S. President Donald Trump and Chinese President Xi Jinping agreed to a temporary ceasefire, giving both sides until March to reach some agreement on trade and issues such as the forced transfer of technology.

Trade tensions between the world’s two largest economies escalated last year, putting global stock markets on edge. The U.S. announced tariffs on $250 billion worth of Chinese goods, while Beijing countered with its own.

In the wake of the latest round of trade talks between officials from Washington and Beijing, outside observers are noting that some progress appears to have been made — but there’s still a long way to go before a meaningful deal. “There were several signs of modest progress from these mid-level talks. China, for its part, said in a Thursday morning statement issued by its Commerce Ministry that the just-concluded round of trade talks with the U.S. were extensive and established a platform for f

In the wake of the latest round of trade talks between officials from Washington and Beijing, outside observers are noting that some progress appears to have been made — but there’s still a long way to go before a meaningful deal.

On Wednesday, the U.S. trade delegation released a statement noting a long list of outstanding issues in the relationship between the world’s two largest economies — including “forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft of trade secrets for commercial purposes, services, and agriculture.”

Still the official statement also recognized that China had pledged to buy “a substantial amount of agricultural, energy, manufactured goods, and other products and services” from the U.S. Some analysts said that language, in addition to the meeting extending to a previously unannounced third day, indicated some potential thawing in the dispute.

“There were several signs of modest progress from these mid-level talks. First, negotiations went a day over the original schedule, indicating enough substantive discussion to at least keep officials at the table. Day three reportedly focused on the more knotty structural issues raised by the US side in detailed demands presented to Beijing in May 2018,” a group of experts from political risk consultancy Eurasia Group wrote in a Wednesday note.

They added: “Second, (the U.S. Trade Representative’s) statement noted that China has pledged to purchase a ‘substantial amount’ of US exports, including agriculture, energy and manufactured goods. That language suggests that, as we expected, Beijing is carrying out a strategy of aggressively purchasing US goods — playing to (U.S. President Donald Trump’s) focus on reducing the trade deficit — in the hopes that it lessens the pressure on China to undertake difficult structural measures.”

China, for its part, said in a Thursday morning statement issued by its Commerce Ministry that the just-concluded round of trade talks with the U.S. were extensive and established a platform for future discussions.

“Both sides … held broad, deep and meticulous discussions on shared observations on trade issues and structural problems, laying the foundation for addressing areas of common concern,” the statement said, according to a CNBC translation of the original Chinese.

Even before the talks were extended into a third day, the analyst community was already seeing a positive sign when China’s top trade negotiator, Liu He, reportedly stopped by the negotiating room on Monday. Given the vice-ministerial level of the talks, that was interpreted as a strong signal that Beijing was taking negotiations seriously.

In early December, Trump and Chinese President Xi Jinping agreed to a temporary ceasefire, giving both sides until March to reach some agreement on trade and issues such as the forced transfer of technology.

Trade tensions between the world’s two largest economies escalated last year, putting global markets on edge. The U.S. announced tariffs on $250 billion worth of Chinese goods, while Beijing countered with its own battery of levies.

Both parties, the Beijing ministry said, agreed to maintain close contact.

In response to the U.S. statement on the talks, U.S.-China Business Council President Craig Allen said in a release that his group was “pleased that the two governments had substantive discussions over the past three days.”

Still, he noted that the business community is concerned about more than just the overall balance of trade between the two economic superpowers — a problem that is at least partially addressed by Beijing’s pledge to purchase more U.S. goods and services.

“We urge both governments to use the time remaining in the 90-day negotiating period to make tangible progress on the important issues at the core of the current dispute: equal treatment of foreign companies in China, as well as China’s intellectual property and technology transfer policies,” Allen said.

Beijing has denied that it forces foreign companies to transfer technology to Chinese parties in exchange for market access, but it has in various ways acknowledged that it could do more to allow overseas players an equal footing within its borders. To what extent such reforms are truly on the Communist Party’s agenda remains a matter of debate.

Another “elephant in the room” in the trade relations between China and the U.S. is additional tariffs that both countries have imposed on each other’s products, said Eric Robertsen, head of global macro strategy at Standard Chartered.

“Now, trade is only one part of this, the bigger picture issues around intellectual property, forced sharing of technology et cetera I don’t think those get addressed in the short term,” Robertsen told CNBC’s “Squawk Box” on Thursday.

“Remember, the thing that we have to solve for is getting to the end of the negotiating period and making sure that enough progress has been made so that tariffs not lifted, we still have that elephant in the room of tariffs,” he added.

Beijing’s efforts to prop up a slowing Chinese economy, in the middle of an ongoing trade war with Washington, is pushing the government to introduce previously untested policies, according to a senior analyst at Moody’s Investors Service. While official data have indicated that China’s economy held up for much of last year, cracks have started appearing in recent months as production metrics and export orders fell. But the tariff war has piled on additional pressure on China’s economy. “We see

Beijing’s efforts to prop up a slowing Chinese economy, in the middle of an ongoing trade war with Washington, is pushing the government to introduce previously untested policies, according to a senior analyst at Moody’s Investors Service.

While official data have indicated that China’s economy held up for much of last year, cracks have started appearing in recent months as production metrics and export orders fell.

After decades of breakneck growth, the world’s second-largest economy was already facing domestic headwinds even before the escalation in trade tensions with the U.S. But the tariff war has piled on additional pressure on China’s economy.

“We see growth in China slowing to 6 percent,” Christian Fang, an assistant vice president-analyst at Moody’s, told CNBC’s “Squawk Box” on Thursday. “I think the bigger issue for us is that policy trade-offs have increased in China. On the one hand, there is this broader campaign of de-risking, deleveraging, but policy also seems to be shifting slightly towards growth — supporting growth.”

“Some of the tools in the policy response they have meted out are untested,” he added. “Tax cuts, for instance, we don’t know what the businesses and the consumers — how they would respond to the tax cuts.”

In last few months, Beijing has announced several measures aimed at propping up its economy.

On Wednesday, state media reported that China will be granting more tax breaks to small firms. The measures include substantial cuts in business income tax rates and an increase in the tax threshold, with the aim of saving small and micro firms a total of 200 billion yuan ($30 billion) each year, according to Xinhua.

The People’s Bank of China said last Friday it will cut the amount of reserves that banks are required to hold by 1 percentage point this month — that means banks would have more money to lend to customers. In December, the Chinese central bank introduced a new tool to encourage commercial banks to give out more loans to smaller firms.

The measures to spur growth, which theoretically could saddle the economy with more debt, is creating a trade-off with Beijing’s efforts to clean up its financial system. Experts have said that the ongoing trade war with the U.S. is forcing China to retreat from its own anti-debt battle while others have suggested the country hasn’t done enough to stimulate the economy.

“Since mid-2018, China’s authorities have eased policy through targeted liquidity measures, taxation changes and infrastructure spending, which will shore up growth,” Fang and his colleagues at Moody’s wrote in a Jan 10. report.

“However, designing and implementing policy that simultaneously buffers the shock of the US trade tariffs and potential further restrictions while continuing deleveraging and derisking without triggering too sharp a slowdown in growth, poses complex trade-offs,” they added.

The U.S. and China on Wednesday concluded a three-day round of trade talks in Beijing, which analysts said revealed signs of modest progress.

Oil prices rose 2 percent on Wednesday as the extension of U.S.-China talks in Beijing raised hopes that the world’s two largest economies would resolve their trade standoff. U.S. West Texas Intermediate (WTI) crude oil futures were at $50.82 per barrel at 0945 GMT, up $1.04, or 2.09 percent, the first time this year that WTI has topped $50. International Brent crude futures were up $1.09, or 1.86 percent, at $59.81 per barrel. The trade talks in Beijing were carried over into an unscheduled thi

Oil prices rose 2 percent on Wednesday as the extension of U.S.-China talks in Beijing raised hopes that the world’s two largest economies would resolve their trade standoff.

U.S. West Texas Intermediate (WTI) crude oil futures were at $50.82 per barrel at 0945 GMT, up $1.04, or 2.09 percent, the first time this year that WTI has topped $50.

International Brent crude futures were up $1.09, or 1.86 percent, at $59.81 per barrel.

Both crude price benchmarks added to Tuesday’s 2 percent gains and have now been on the rise for eight straight days – their longest rally since June 2017.

“After a dreadful December for risk markets, crude oil continues to catch a positive vibe,” said Stephen Innes at futures brokerage Oanda in Singapore, citing tensions between the superpowers which have cast a pall over the world economy.

The trade talks in Beijing were carried over into an unscheduled third day on Wednesday, amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased U.S. access to China’s markets.

“Talks with China are going very well!” U.S. President Donald Trump tweeted, without elaborating. State newspaper China Daily said on Wednesday that Beijing was keen to put an end to its trade dispute with the United States, but that any agreement must involve compromise on both sides.

Citing the trade friction, the World Bank expects global economic growth to slow to 2.9 percent in 2019 from 3 percent in 2018.

“At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead,” World Bank Chief Executive Kristalina Georgieva said in a semi-annual report released late on Tuesday.

More fundamentally, oil prices have been receiving support from supply cuts started at the end of 2018 by the Organization of the Petroleum Exporting Countries and allies including Russia.

The OPEC-led cuts are aimed at reining in an emerging supply overhang, in part because U.S. crude output surged by around 2 million barrels per day (bpd) in 2018 to a record 11.7 million bpd.

Official U.S. fuel storage data from the Energy Information Administration is due at 1800 GMT on Wednesday.